Relevant Funds Regime Policy

Summary

From 7th May 2026, payment and electronic money institutions, including credit unions that issue e-money, will have obligations under the FCA’s Supplementary Regime and Client Assets (CASS) Sourcebook. The regime ensures better safeguarding practices by these institutions and is aimed at reducing risk of harm to consumers and market integrity. This article provides an overview of the safeguarding requirements, relevant funds policies and the post-repeal regime.

New Safeguarding Regime

Payment and e-money institutions (‘safeguarding institutions’) are primarily regulated by the Financial Conduct Authority (FCA) who provide regulatory oversight, authorisation and conduct under the Electronic Money Regulations 2011 (EMRs) and Payment Services Regulations 2017 (PSRs). The safeguarding institutions must currently comply with all rules and guidelines in their respective regulations, in addition to a handful of modules and sourcebooks from the FCA Handbook.

However, this hybrid framework has led to issues with some firms not implementing adequate safeguarding measures, leading to an unacceptable risk of harm to consumers and market integrity. In 2023, the UK Treasury published a review into the existing regulations, with the FCA’s subsequent consultation paper (CP24/20) proposing improved rules and guidance for the safeguarding regime. Whilst the current EMRs and PSRs have high-level rules and requirements for safeguarding relevant money, there were still concerns that required making customer funds safer.

This led to regulatory improvements to the safeguarding regime which will be enforced in 2 separate stages. From 7th May 2026 the Supplementary Regime will come into effect to encourage greater compliance with the existing safeguarding requirements. This includes a new CASS sourcebook module specific to safeguarding institutions and the protection of relevant funds and relevant assets. Stronger, more consistent and effective record keeping, reporting and monitoring requirements will be published in CASS 15 and CASS 10A, which will support the existing regulations.

The second stage is being referred to as the Post-Repeal Regime and will come into effect once the EMRs and PSRs are repealed under the Financial Services and Markets Act 2023. This will see all rules and regulations set by the FCA handbook and CASS sourcebook and will being the safeguarding regime under one framework. A timeframe for the Post-Repeal Regime has not been set yet as it ultimately depends on the Treasury’s revoking of the EMRs and PSRs.